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Ethiopia Can Boost Economy Amid Challenges, Says Germany Economist

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December 03/2021 (ENA)  A German economic analyst, Patrick Heinisch, said Ethiopia has the potential to boost its economy by generating additional resources, increasing foreign direct investment and export.

In an exclusive interview with ENA, Heinisch said Ethiopia has several options to generate revenue in mobilizing external resources.

According to him, the Government of Ethiopia has so far been relatively successful in increasing remittance and foreign direct investment, which is the second revenue component.

The analyst noted that the effort  of the government in increasing foreign direct investment (FDI) and increasing remittance by mobilizing the diaspora not to send money through the black market but by official channels has been successful.

“We have also seen a very strong increase in foreign direct investment in the fourth quarter of the this year, between April and June 2021. That seems surprising because it is in the midst of various challenges, including the pandemic. In addition, Telecom licensing could have increased revenue,” Heinisch added.

According to him, despite the challenges such as the elections and pandemic, there is still interest of foreign investors in Ethiopia.

”Investors, especially the big ones, still perceive Ethiopia as a promising market. They see the long term potential of Ethiopia’s market with more than 100 million inhabitants, which enables to generate revenue,” he elaborated.

The economist pointed out that Ethiopia can substitute the Africa Growth and Opportunity Act (AGOA ) by diversifying the export market which is the key absolutely to compensate the AGOA opportunity.

In the case of AGOA, the denial of better access to the U.S can be an opportunity for investors who remain in Ethiopia as they can find new markets which compensate the loss of the US markets.

Of course, the government needs to support these investors to some extent in the medium to long term, Heinisch suggested.

As AGOA would end in January, Ethiopia needs quick solutions and the government should support investors to some extent, the economist stressed.

He further recommended that the government be a little less reliant on foreign brands and try to increase remittances and foreign direct investment.

Heinisch stated that foreign interventions, including the AGOA sanctions imposed on Ethiopia, would not bring long lasting peace in the country. The current situation in Ethiopia must be resolved by Ethiopians themselves, the outside powers cannot do this. The Ethiopians themselves shall find solutions to the conflict.

The West may not understand enough that sanctions would not help to achieve sustainable peace or to end the war, he noted.

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